Question

“Most large department stores pay their workers the minimum wage, which is Massachusetts in 2020 is $12.75/hour. However, Target announced that pays its workers to $15/hour by 2020. Target CEO Brian Cornell claims that this higher wage will help it attract and retain better workers, leading to a more pleasant shopping experience and ultimately make Target more profitable.” “This illustrates that if Massachusetts raises its minimum wage to $15/hour in 2021 then for most businesses which pay their workers minimum wage the extra productivity and quality of work of the minimum-wage employees will offset the extra expense of their wages, so we can expect little to no impact on their profits.” Make a counter-argument.

Answer 1

The major assumption in the statement is that the productivity would increase if the minimum wage is increased from $12.75.hour to $15 per hour. However, it might not be the case. The workers know that $15/hour is the minimum wage now and therefore the employer is obligated to pay this amount. Therefore, this doesnot provide the employee with any extra motivation than before to work harder. Therefore, the productivity is likely to be the same. Meanwhile, the costs for the businesses would have increased now with no improvement in productivity. This would lead to a negative impact on their profits.